As one-month promotions roll off, conversions to fully paying subs appear to be greater than expected. This is important because it speaks to the quality of subscribers (i.e., stickiness, level of incremental revenue).

Page-view declines of about 20% remain well below remnant inventory of about 50%.

There is potential to further increment subscriptions.
New York Times
(ticker: NYT) is currently selling directly. On June 30, [
Apple
(AAPL)] iTunes store sales begin, which hold the potential for another subscriber growth spurt.

In addition, the [
Ford Motor
(F) unit] Lincoln 100,000 subscriber freebie subsidy to heavy users could further increment fully paying subscribers in 2012. Other similar programs are possible.

The New York Times has seen an increase in home-delivery orders. Cancellation rates have reportedly moderated. This is important because circulation forms the foundation for ad sales.

This is a faster adoption curve than the last try. Factors contributing to a faster rate of adoption include McKinsey & Co. engagement, learning from prior mistakes, innovating off of the Financial Times' metered model, fishing in a more stocked pond (i.e., nytimes.com has about two times the unique visitors than at Times Select launch [in 2005, and ended 2007] and a substantially bigger base of unique visitors to try and convert to paying subs in comparison with other newspapers).

New York Times is currently valued at 15.9 times 2011 earnings per share, a 15% market premium, versus five-year average of 16.6 times.

The company's free-cash-flow yield is 8.8% on 2011 estimates and 13.2% on 2012 estimates. Risks include steeper print advertising declines, increased digital competition and an inability to cut costs commensurate with revenue declines as the low-hanging fruit has been picked.

-- William Bird -- Robert McManus

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